These are a few of our favorite things.... from the news this week

Below are a few articles that we read this week, and just had to pass along. We hope you enjoy them! 

Canadians' love affair with debt moves beyond the home
The Globe and Mail
Yeah, yeah -- we know. Another article about debt. But this one is a little different. Below is one of our favourite, less-alarmist passages:
"Yes, Canadian interest rates will go up in a couple of years, maybe enough to sting some borrowers. The rise in rates, however, is going to be muted unless the rest of the world – and in particular the United States – undergoes a particularly robust expansion. The likelihood of that happening is pretty slim: for one thing, the economic problems outside of Canada are deep enough that inflation (which is one component of interest rates) is not going to be much of an issue for a long time."
Top 5 staging tips for home sellers
 If you're in the market to sell your home - or thinking about getting your home in tip top shape for the spring market - it couldn't hurt to brush up on your staging techniques. Our fave on this list? "Don't become a drive-by". Make sure the outside of your house looks just as great as the inside, so prospective buyers don't take one look and run off.
20 DIY centrepiece ideas
Just in case you're still searching for that perfect festive centrepiece, here is a list of 20 that you can make yourself!

Stress free Christmas on a budget – the “guy” way

Yesterday I wrote a blog post on how I deal with the stress and expense of Christmas.  I was inspired by my phone conversation with a girlfriend as we were lamenting how much we had to get done in a very short time.   On top of everything else a girlfriend sprung a last minute wedding on me and now I’m hosting a Bachelorette party on Dec 21^st.  But the guy she’s marring is perfect and I’m over ridden by her joy.  

When it was all said and done yesterday I went off to meet an old friend for a visit.  A bachelor friend who is amazing in every way.  When I started in on my Christmas rant, he raised his hand and shut me down.  Let me tell you how this works he said.  I listened and here’s what I gleamed from his tips for a stress free Christmas. 

1.       Exterior Illumination is fun:  He takes his time and spends hours in all the Big Box hardware stores looking at boxes of lights.  He knows every shade of white LED lights and never makes a mistake on his purchase.  He over spends, gets home, measures and takes half back.  After all you can never have too many trips to the hardware store.

2.       Shopping is fun and cheap:  He has a list and does his pre-cruise of the stores weeks and days in advance.  Then at 5:00pm on Christmas Eve he hits the stores.  According to him, stores start marking down their prices for Boxing Day late on Christmas Eve.  The stores are empty by now and he has the run of the place. (I didn’t know that)

3.       Groceries and Liquor:  After shopping he hits the grocery and liquor store.  No over spending here because time is of the essence and you have to stick to the list

4.       Entertaining:  Easy Peasy – Call all your friends in early December and book a lunch or dinner out and everyone pays their own.  (ha! No way was he getting away without paying for my drink)

5.       Decorating: After the exterior illumination he pulls out the pre-lit, pre decorated tree and plugs it in.  And then he goes to town on the interior lights.  More trips to the hardware store, more heaven on earth.

6.       Special Events:  Everything he needs is on his 60” plasma screen TV.  (I got an invite to drop by and watch “Elf” with hm.)

7.       Christmas Dinner:  Okay I got him on this one.  He goes to family but said he would love to host one.  The Royal York Hotel does Christmas dinners and raises the money for charity.  (I did not know this)

Could I have this kind of Christmas? I started to think about it and how my family would react.  There are some take aways for sure but the thing I learned was the value in keeping it simple.  The only one that would miss all my effort is probably me.  If he’ll come over and do my “exterior illumination” I think I can take it from there.  I never do the big box hardware store unless I have to.   

How I Deal with Holiday Stress........

With the holiday season already well underway, you're probably already feeling the holiday stress. Maybe you've already blown your holiday budget - or maybe you're still stressing over all the gifts you still have to buy. And then, of course, there's the cost and preparation of holiday dinners to worry about.

Relax. The holidays don't have to be a time to dread. Below are some strategies to make them more enjoyable:

1.Acknowledge your feelings.
 If you find yourself hyperventilating at the mere thought of the holidays, take some time to figure out why.
2. Simplify
If you're worried about money, set a budget to figure out exactly how much you can afford to spend -- and don't feel bad if you can't buy the most expensive gifts for everyone on your list. If it's the mere pressure of entertaining that's got you down, consider asking someone else to host Christmas dinner - or simplify it by making it a potluck.
3. Don't be afraid to create new traditions.
Sometimes we get so caught up with how the holidays "should"? play out that we put undue pressure on ourselves. Just because you used to buy a gift for every single member of your family doesn't mean you always have to do that. As families age and expand, it's not always necessary to continue the same old traditions. Consider gift exchanges or a group donation to a mutually-decided upon charity.
4. Talk it out.
Remember - if the holidays are stressful for you, they're probably stressful for others as well. Don't be afraid to talk about your feelings and discuss ways to alleviate stress.

Client Appreciation Night Part 1

Just thought I would share this picture of our client appreciation night last night.  Great seats and a great show.....  Our next event is Feb  18th at the Bon Jovi concert. 

Tales from the Trenches....the Dangers of Co-mingled Assets

Once upon a time there was a middle aged women with many children (5 to be exact) who had a good job, a good marriage and a beautiful home.  One day she came home from work and just as she was wondering what to serve for dinner the sheriff knocked on her door and told her she had to leave he was seizing the house for the mortgage company.  Stunned, but not stupid, she quickly called her lawyer who told her to pack as much stuff as she could get in her car, find an apartment and start divorce proceedings. 

As unusual as this story may seem to you we have seen it more than once.  So what happened?  The Husband had been self employed and the business had hit a bump.  Without discussion he went to see a mortgage broker who arranged to refinance the home.  He went home and told his wife about the resolve and told her she had to go to the lawyer and sign the documents.  Which she did.  Once the new mortgage was in place he never made a payment.  Her credit has always been immaculate but now it was showing 2 judgements against her from the mortgage company.  Once the house was sold (by the mortgage company) the judgements were paid but her credit was ruined for seven years.  She couldn't even get a new car.

So what should have happened?  The lender would have been smart to request ILA (independent legal advice) for both spouses.  BUT..... at the end of the day she signed a legal contract and left it to her husband  to take care of it.  The red flag should have been the refinance.  Since their credit was separate she had no idea how bad his was.  Never co-mingle anything until you have done your due-diligence.  If you're not sure what you should be doing get your own lawyer.  And if, like in this woman's case, it causes a rift between you and your partner then guess what.  The rift was coming anyway. 

Fixed or Variable? Will it ever get easy?

With interest rates at record lows, choosing between a fixed or variable rate mortgage has never been harder. So, which one should you go with?

The answer is one you probably won't like: It purely depends on your specific financial position and comfort level. Plain and simple.

If, for example, you can weather a slight increase in mortgage payments, you should definitely go for the variable rate. You're never going to see rates lower than this. If you can opt for a variable but set your payments as if you were paying the going fixed rate, you'd not only be protecting yourself from the shock of future increases, but you'd be banking a ton of extra money per month towards your principal.
On the other hand, if you're not extremely eager to take on risk, a fixed rate might be the way to go. Sometimes a five-year fixed rate is the best option if you want to set a budget and know exactly what to expect over the next five years. The thing is, sometimes a four-year fixed rate will work just fine too. Most people don't stay in their first home for more than five years, and the four-year terms occasionally come at a lower rate. At the same time, if you don't see yourself moving over the next decade or so, a 10-year option might be your best bet.
The point is that mortgages are not one-size-fits-all. To find out which option is best for you, give us a call. We'd love to help.1 888 372 7367. 

Only "insane" people have variable mortgages?

Kevin O'Leary, co-host of CBC's Lang and O'Leary Exchange and the "greedy" dragon on Dragon's Den, turned heads earlier this month when he spoke out against variable rate mortgages.

"If you have a variable rate mortgage right now, you're out of your mind not to lock it in. You'd be insane not to lock it in," he said.

His controversial views on the subject come shortly after announcing his entrance into the mortgage market. While no one yet knows whether O'Leary's coming into the industry as a broker or a lender, it's no secret his anti-variable opinion comes with an ulterior motive.
If he was genuinely looking to educate mortgage holders on the variable-fixed debate, he'd acknowledge that one isn't better than the other. It purely depends on the individual's financial position and what they feel comfortable with - plain and simple.
If, for example, you can weather a slight increase in mortgage payments, you should definitely go for the variable rate. You're never going to see rates lower than this. If you can opt for a variable but set your payments as if you were paying the going fixed rate, you'd not only be protecting yourself from the shock of future increases, but you'd be banking a ton of extra money per month towards your principle.
On the other hand, O'Leary's point of view does make sense for individuals who are not as eager to take on risk. Sometimes a five-year fixed rate is the way to go if you want to set a budget and know exactly what to expect over the next five years. The thing is, sometimes a four-year fixed rate will work just fine too. Most people don't stay in their first home for more than five years, and the four-year terms occasionally come at a lower rate.
The point is that mortgages are not one-size-fits-all and, given O'Leary's prominent position in the media, he should know better than to say that they are.
 

Are you more financially savvy compared to 2008?

Canadians feel the 2008 economic crisis has made them more financially literate, according to a poll by BMO. The majority of respondents say they now have a better understanding of their investments, and 74% rate themselves as either a B or C when it comes to financial literacy. How do you measure up? 1. Do you feel knowledgeable about Registered Retirement Savings Plans? (79% answered yes, compared to 69% in 2008) 2. Are you comfortable with Tax Free Savings Accounts? (72% said yes, compared to 64% in 2008) 3. Are you confident in Guaranteed Investment Certificates? (62% said yes, up from 60%) Are there specific financial topics you feel more comfortable with now, compared to in 2008? What financial areas of your life could use some improvement?

Financial Literacy is no longer optional

November is Financial Literacy Month, and the Financial Consumer Agency of Canada (FCAC) has provided us with some tips and tools to help us all become more financially savvy. Below are a few highlights -- you can find more on www.itpaystoknow.gc.ca. 

·         Making a Budget and Sticking to It takes you through all you need to know about budgets, including what they are, what to do before and after making a budget, and how to use the Budget Worksheet.
·         The Budget Calculator is an interactive tool that lets you list all your income and expenses. It will help you see where you might be able to reduce expenses in other areas (such as daily coffee or lunch purchases) to cover your additional holiday expenses. ·         In addition to making and sticking to a budget, look at ways to reduce the cost of paying for those additional expenses.  FCAC's tip sheet, Be Smart with Your Credit Card, lists ways to use your card wisely.
·          You may want to consider alternative forms of payment like cash -- sometimes this can even get you a discount.
·         It's important to remember that a credit card doesn't increase the amount of money you have available to spend. Continue to live within your means and your budget.
·         Remember that debit cards may also have costs associated with them. It could cost you more than $8.00 to use an automated banking machine (ABM) that is not owned by your financial institution.
·         For consumers who get swept up in the generous spirit of the holidays, our publication How to Beat That Debt gives tips on keeping track of your spending and how to avoid getting into more debt, as well as managing the debt you owe now.

Sarah Richardson Design Tips

If you've been wondering how to paint an open-concept home, or are looking for kitchen cabinets that inspire, you might want to check out Sarah Richardson's (of HGTV fame) webisode series. While Richardson is typically known for scouring flea markets and refurbishing vintage finds, this series of webisodes focuses on remaking a home with products you can find at a Big Box store. Despite the fact the series is sponsored by Lowes, there's not a lot of obnoxious Lowes promotion - you still get the helpful, inspiring and straight-up Richardson that you're used to. The webisodes started airing on October 19, and a new one will appear on Richardson's site every week until December 21. Happy decorating!

Who Owns Your House Anyway

While many of us call ourselves homeowners when we first sign a mortgage, the sad reality is that the bank usually owns more of our homes than we do - at least for the first number of years.

 

But paying down your mortgage quickly - with accelerated, lump sum and increased payments - can help you own your home years sooner.

If you've been taking these steps - or if you've had your mortgage for a number of years - you might want to check out this cool tool: http://www.whosmyhouse.com/en/.

It will help you figure out exactly what percentage of your home you own - and what part the bank still has a claim over. It even breaks it down according to rooms so, if you're just starting out, you may only own the equivalent of the bathroom or kitchen

How to Sell Your Home Fast

Lately I have been toying with the idea of selling my home.  I have talked to some realtors and here is what I have learned.  Are you selling or have sold a home recently?  I would love to hear from you and any other tips you have. 

1. It's all about the marketing. 

Regardless of what you're selling, you have to have a sound marketing strategy. Home sales are no different. A top-notch brochure with professional-looking photos and a nice layout is a must-have - and make sure it's prepared before the first viewing. In addition, the MLS listing should include a virtual tour, as well as a decent number of photos. And it should be worded nicely, highlighting all the benefits of both your home and the area around it. Put yourself in the potential buyer's shoes - what will they enjoy most about living here?

2. Make your home easy to see. 

If you're really committed to selling your home, you have to be committed to showing it too. This means that if a potential buyer wants to view it, you need to let them - regardless of the time. It also means that your home should be in a relatively tidy state constantly - in the off-chance you get a last minute viewing.

3. Price it right. 

Okay, so nobody really knows how the market will respond to a particular home. That's why you have to do your research by looking at comparables. Your real estate agent should be able to come up with a range and a suggested price tag for your home, but if you'd prefer to list at the high end of that range, make sure you do so with a strategy in mind. The longer a house stays on the market, the more likely you are to get low-balled. Have a plan in place that determines at what point you're willing to drop the price tag should your home fail to move.
Selling your home can be a very emotionally draining process, which is why you don't want to drag it out. By following these tips, and the recommendations of your real estate agent, you'll hopefully attract that perfect buyer sooner rather than later.
 

It's all @JonChevreau 's fault .... I swear

Today I attended the Canadian Financial Blogger's conference in Toronto and I learned a lot.  Most Canadian Financial Bloggers know and love Preet Banerjee or @PreetBanerjee or Blogger extrodinaire at "Where does all Money Go".  It was inspiring to say the least and I learned so much.  Things are going to be different at Mortgages for Women from here on in.

The biggest lesson I learned today was from Preet himself.  He is a wonderful down to earth great guy.  When you meet him you have to wonder how he got to where he is today.  Today we learned it was all Johnathon Chevreau's fault.  "Back in the day" Mr. Chevreau quoted Preet in a page and half article as saying something that nearly burried him with his employer.  Some quick 2-stepping lead to some intense media training and the rest they say is history.   And it couldn't have happened to a nicer guy.  Preet was so generous to share his knowledge and experience with us. 

I admit I'm a blogger by accident and today I learned that a lot of blogger's started the same way.  It was great to connect with others and learn their stories.  And to think the whole journey today was all the fault of Johnathon Chevreau, now the editor of Money Sense, makes me grateful.  I haven't always agreed witih Johnathon's opinions when he was at The Financial Post but I have always respected him.  Well done! 

Time to Panic?

In the weeks following Finance Minister Jim Flaherty's mortgage rule changes, the media has been full of stories debating whether we're on the brink of a soft landing, a crash, or neither.

While it's obviously always good to stay on top of the real estate market, it's important not to read too much into the opinions of "experts"?. Not only does the media love to sensationalize real estate, for some reason (think of how many times these same reports have told you to "lock in" over the last few years), but it's very, very difficult to paint the entire Canadian real estate market with one brush. Heck, it's even hard to paint the real estate markets in one city with the same brush!

With that in mind, try to push all the extraneous chatter out of your mind and narrow your focus to encompass your situation and your situation alone. If you're thinking about moving in the near future, try to look at these factors, rather than those of the market as a whole:

1) Are you ready to move?
If you're not ready to move - namely, your finances aren't in order, your credit is a mess, and your home needs a lot of updating - don't rush into listing it just because you're worried the market is going to tank. You'll likely not get top dollar for it anyway, and you might end up spending more money on a new mortgage if your credit isn't in good shape.
2) What does your competition look like?
Are there a lot of properties on the market in your area right now? If so, you may want to wait a bit to list. The more homes you're up against, the higher the chances that there are places nicer than yours. If those places sell quickly, not only are they off the market, but you'll also be able to benefit from their selling price.
3) What's going on in your area?
If there are lots of improvements scheduled for your area, you might want to hang onto your place a little longer. While the market as a whole may slow down, there might be an increased demand in your area if you're getting a new transit line, or new improvements to your neighbourhood.
4) Who's likely to buy your home?
It's been said that first-time buyers are the group that's going to be hit hardest by the new mortgage rules. If your home is a starter home, you might want to sell sooner rather than later. On the flip side, if it's more of a second home, you may be able to afford to hang onto it for a while.
Obviously, no one can predict the future and, like all investments, real estate comes with its fair share of risks. If you focus on what makes sense for you, rather than everyone else, however, it will be a lot easier to justify your decisions and be happy with them.

How will mortgage changes affect prices?

As a homebuyer (or seller), you probably have one main question when it comes to the Federal government's new mortgage rules: How will these rules affect me? 

To be honest, nobody knows for certain - and anyone who seems certain is a downright liar who's probably trying to sell you something. We can, however, hypothesize.
For example, we can assume that with maximum amortizations set at 25 years, limits on refinancing, and the disappearance of mortgage insurance for million dollar-plus homes, those at the bottom of the financial pyramid will have a more difficult time buying homes. But if there's a lack of demand, we'll have to see a drop in prices, right? Well, that's where it gets a little tricky.
According to this article in the Vancouver Sun http://www.vancouversun.com/opinion/Mortgage+rules+lower+prices/6890026/story.html), if you live in a land-constrained area - like Vancouver, Toronto, or Montreal - chances are a curb in demand isn't going to curb housing prices, because there's still a shortage of land to go around. The argument is that, when there's not very much supply anyway, a little less demand isn't going to cool the housing market.
While we don't really agree with that theory - if there's zero demand, it doesn't matter how much supply you have - we definitely see the argument. And while the pool of buyers in those areas will likely become smaller, there are still a lot of high-spenders willing to inflate housing prices. Compared to the rest of the world, Canadian real estate is cheap - and foreign investors see it as a great opportunity to get in at the ground level. Many of them are also dealing with cash, so the mortgage rules don't affect them.
The notion of rising interest rates deflating the hotter housing markets is also a concept up for debate. While many believe that housing will become more affordable once the Bank of Canada starts increasing rates, others are sceptical. After all, rates were increased in Australia and New Zealand with no affect on escalating housing prices.
It should also be noted that a 1% increase in interest rates will cost $100 more per month on a $200,000 mortgage (with a 25 year amortization). So while other people are being affected by affordability, you will be, too! That being said, even a little less demand will make it slightly easier to breathe in Canada's hot markets. Maybe instead of 10 people bidding on a home, there will only be 5. Or maybe that fixer-upper will go for list, instead of $50,000 above. Only time will truly tell...

Why I Don’t Get Racial Profiling (Stories from the Trenches)

One day over my morning coffee I read an article in a National Newspaper about the struggles of immigrants and why someone would walk into a tourist mall and unload bullets from a hand gun.  It brought to light the “racial profiling” and how being a different colour automatically makes you a suspect.  I guess it happens but I found the article shocking.

Here’s the deal from an average Canadian (me).  In my work as a mortgage broker I see, and in my mind profile, a very different immigrant.  While all the events were taking place and the up roar was going on I was working with a young family who had emigrated here from Kenya.  They had worked hard in average paying jobs, saved money, built credit and were buying their first home.  They drive a nice car, have three young children going to school and live a very normal life.  And such is the case with anyone I meet that moves here from somewhere else.  Yup that pretty much sums up my profile.  I see immigrants as brave, because I can’t imagine moving somewhere totally foreign, they are hard working and accomplished.  They have what it takes to succeed.  

So when I read articles like the one in the paper I’m shocked.  I am not disputing so called facts and figures but I am wondering why we don’t get to hear the success stories as well.  Or maybe they are just too “average”.    In my world the average are the normal and the only profiling I would consider is of a criminal who walks into a crowded area with a hand gun to extract revenge no matter what colour. 

Now here’s an idea for a future article.  Why not try to explain why all the high profile psychopaths in the Kingston jail are white males.   Really, that would be just as stupid. 

The low-down on mortgage insurance

There's been a lot of talk about Canada Mortgage and Housing Corporation (CMHC) and its mortgage insurance portfolio lately. With that kind of news peg, we thought it was time to clarify some myths and questions about this time of mortgage insurance:

- CMHC isn't the only provider of mortgage insurance in Canada. There are also two private companies - Genworth and Canada Mortgage Guaranty - that offer the same product.

- The type of insurance that these companies offer is technically called "mortgage default insurance"? and actually protects the lender - not the homeowner - if the homeowner fails to pay their mortgage. They then pass that cost of that insurance onto the homeowner. The homeowner has the option of either paying in one lump sum or over the life of the mortgage.

- Lenders typically acquire mortgage default insurance when a homeowner has a down payment that is less than 20% of the value of the home, although they might also get it for other reasons - like if your credit rating isn't quite where they would like it.

- The premium is calculated as a percentage of your mortgage loan and the rate is based on the size of your down payment.

- The lender typically chooses the mortgage default insurance provider, but you can definitely put a word in for the provider that you prefer. For more information on mortgage default insurance - or anything else mortgage-related - feel free to give me a call!

Tips on How to Pick Your Perfect Neighbourhood

Whether you're looking to move up in the real estate market or downsize, finding an ideal neighbourhood can be difficult. Not only is affordability a prime concern, but you want to find an area that you're going to enjoy living in as well. While only you truly know what you're looking for, below are a few online resources that can help make your neighbourhood hunt a little easier: 1. Walkability While it's not important to everyone, a lot of people are looking for neighbourhoods where they can park their car in the driveway and get a bit of exercise when they're not at work. If you'd like to see how walkable a prospective neighbourhood is, check out www.walkscore.com. It will map out the closest grocery stores, coffee shops, restaurants, parks and other amenities and give your potential future home a score out of 100. 2. The Starbucks Effect While you may not necessarily like its coffee, a Starbucks can say a lot about your prospective neighbourhood. This article outlines the effects the coffee shop chain has on property values, and the type of neighbours it attracts. http://www.remaxprestige.com/blog/the-starbucks-effect-how-real-estate-prices-are-influenced-by-starbucks/ 3. Schools If you have school-aged children, chances are you want to move to an area that not only has a school nearby, but a good school. The Fraser Institute puts together an annual report of school rankings that can prove to be very helpful when finding a good one. Check it out here: http://www.compareschoolrankings.org/

Not All Variable Rates are the Same.

Choosing the mortgage that's right for you involves a little bit more than merely deciding whether you're a fixed or variable type of person - particularly if you opt for a variable rate mortgage.

It's not enough to choose a variable rate mortgage based solely on rate - you also have to consider what type of variable rate you'd prefer. Below is a breakdown of the most common types:

1. Adjustable Rate Mortgage
An Adjustable Rate Mortgage, otherwise known as an ARM, will see your mortgage payments adjust with every Bank of Canada announcement that causes the Prime rate to increase or decrease. Some lenders will change your mortgage payment immediately, while others - like ING Direct - will evaluate it every three months.
2. Standard Variable Rate Mortgage
A Standard VRM will allow you to maintain the same monthly payment throughout your mortgage term, but the percentage of that payment that goes towards interest will change according to the Bank of Canada's prime rate.
 3. Capped Variable Rate Mortgage
A Capped VRM comes with a built-in limit as to how high your mortgage payment can go within a given term (usually the cap is equivalent to the 5-year fixed rate at the time of signing). While your interest rate may change on a monthly basis, your payment remains the same. If interest rates rise above the capped rate, your mortgage payment won't change.
Each type of variable rate mortgage comes with its list of pros and cons, so it's important to ask a lot of questions and make sure you understand each product before signing on the dotted line. Remember, we're here to help - so ask away!
 

Things to think about when investing

The real estate market can be a lucrative investment tool if you play it right. The thing is, finding a successful investment property is quite a bit different than finding a primary residence. Below are a few things to consider when hunting down a stellar investment property:

1. Put yourself aside.
When searching for a primary residence, you're looking at each home as a place where you could potentially envision yourself living. When searching for an investment property, you're looking at it through the eyes of a business person. Don't get your two personas mixed up. The components that make a good investment property are quite different from those that make a good primary residence.
2. Find an up-and-coming market.
While established, highly-coveted areas will likely attract plenty of rental demand, they are more than likely also highly priced - which means it will be difficult, if not next to impossible, to generate positive cash flow from your rental property. Seek out smaller areas where homes come with smaller price tags but where you're able to charge a high enough rent to balance your books. A low rental vacancy rate is also a good sign that you won't have difficulty finding tenants for your property.
3. Pay attention to local economic factors.
To make sure that your prospective area is a lucrative one, take a moment to look beyond the real estate market. You want to find a place that has a growing population, is generating new jobs year after year, and where wages have either remained flat or increased over the last few years.
4. Think like a tenant.
While it's true that you won't be living in this property, someone will be. And, in all likelihood, they'll value things like proximity to schools, highways and public transportation. Keep an eye out for proposed improvements to a specific area - if the government is setting up to improve public transit, or if a new factory is going to be built a few blocks away, your property will likely be more in demand, and worth more money down the road.

Mortgage penalties shouldn't shock the pants off you!

We've all heard the stories about the person who wanted a lower interest rate or sold their house and had to pay $1,000's to get out of their mortgage.  When people ask me about a lower rate and I ask what will it take to get out of your mortgage they say "three months interest or some complicated thing I don't really understand".  It's that complicated thing you should understand. 

Today the government took some very important steps to ensure the banks help you understand the IRD (Interest Rate Differential) or "the complicated thing you don't understand".   In fact there are lots of enhancements to the code of conduct that will help the consumer make a more informed decision on their mortgage. 

Before I get too far into it let me explain the IRD in very simple terms.  It works like this.  An investor goes to the bank and invests money.  The bank guarantees the investor a rate of return on their money.  Then they take the invested funds and they give you a mortgage.  The investor makes his interest and the bank puts a little more on the rate to cover their cost of doing business.  After all they found the qualified borrower and will take the risk of you not paying.  So everything is going well and interest rates drop.  The investor is really happy because they are guaranteed the rate of return they invested in.  So when you go to the bank and say "hey, I'm paying way too much interest on my mortgage and I want a better deal" the bank would technically have to go back to the investor and say "you know that rate you're making on your investment? Well they guy we lent the money too wants out so we were wondering if you wouldn't mind taking less on your investment?" 

I think you can imagine there is no need for a bank to have such a conversation with an investor so instead they do this.  They look at the amount of interest they guaranteed the investor and then they look at what they will get by giving you the new rate.  The difference between the new rate and the amount they guaranteed is your penalty or "The Interest Rate Differential".  It's all very legal and has nothing to do with greed. 

So what changed today?   Now the bank will need to explain to you how that works before you sign your firm and legal binding contract.  They will also have to remind you on your yearly statement what a prepayment would look like for you.  Here is the exact wording in the new code of conduct that addresses this issue:
If the lender used the IRD to calculate the prepayment charge, the lender will inform the borrower of :

• the outstanding amount on the mortgage
• the annual interest rate on the mortgage
• the comparison rate that was used for the calculation
• the term remaining on the mortgage that was used for the calculation

I know government documents don't make great reading material but if you feel so inclined to understand this better I encourage you have a look at the actual document.  Before you ask your bank or anyone else to give you a lower rate on your mortgage it would benefit you to at least understand some of the language of banks.

As always if you have any questions you know I'm here. 

Want a Really Good Tax Free Savings Plan?

I often hear people complain that we don't get to deduct mortgage interest on our taxes like they do in the US.  While at tax time that sounds like a total rip off there is an upside to this.

If you bought a home in the US and sold it for a profit you must pay capitol gains tax on the money you made.  In Canada we get to keep it.  (shhhhhhh, don't tell anyone).  Take a look at any amortization schedule and see how much of a payment is going to interest and how much to principal.  The portion that actually pays down the debt is your savings.  When you sell house add up the amount you have paid towards the principal plus what you have made on the sale over and above the purchase price.  Voila - savings!  And it's tax free.

Now I know some would argue that you have paid the bank a whole bunch of interest so to keep everyone happy let's include those numbers.  So add up all the interest you have paid to the bank.  Now try to estimate what a rental would have cost you a month (you have to live somewhere).  Subtract the the interest paid to the bank from the amount of rent you would have paid and see if you win.  Did you pay more in interest than you would have paid in rent?  It's very rarely the case.

My point is owning a home and being sensible about repaying the mortgage loan is the best tax free savings you will ever have.  There is no cap! 

If you have any questions or if you just want to argue the point please feel free to comment and let's start the discussion. 

Let's have Lunch with Gail VazOxlade

One of the greatest champions of women and their money to come along is the straight talking Gail VazOxlade.  I think it's wonderful that Slice gave her a show where she could showcase ordinary Canadians and teach us all a thing or two about money.  I for one love this lady and I know she is one busy bee.  Gail rarely does public appearances and so it is with great pride and pleasure that Mortgages for Women is once again sponsoring "Lunch with Gail" to raise funds for Northumberland Services for Women. 

This luncheon will be held in Cobourg Ontario on March 24th at the Cobourg Lion's Community Center.  The Lunch begins at noon followed by a straight talk from Gail, a chance to ask questions and of course get your books signed.  Last year this was a sold out event and this year will be no different.  We are selling tickets in our office and you can purchase one by calling at 888 372 7367 and work day between the hours of 9:00am - 3:00pm.  Tickets are $25 if you buy them before March 15th and then they go up to $30.

But wait there's more.  Mortgages for Women is gong to have tables reserved so we can all sit together.  We will also be upgrading 2 lucky people to Gail's table for lunch.  In order to qualify for the draw you must let us know you have tickets by commenting on this blog post and follow us on facebook.

This event will be worth the drive to Cobourg.    Let us know if you are coming from out of town because we are planning a Mortgages for Women after party and we want you to be there.  Dont' miss this fun filled afternoon.  Grab your besties and we'll see you in Cobourg!

Here is a copy of the flyer for all the complete details.  Remember, in order to qualify to be upgraded you must let us know here on the blog you are coming and follow us on facebook. 

You're invited to a Condo Release VIP Party - sort of.

There’s a new kid coming to town Feb 4th and I couldn’t be more excited.  It’s the pre-release party for the Bay Condos at 1000 Bay St.  This neighborhood has so many memories for me.    Who can forget the early days of the Toronto Film Festival when all the stars use to dine at the 990 Bistro?  I once lined up for hours to get Arnold Schwarzenegger’s autograph. 

This is a new Condo project from Cresford Development Corporation who is no stranger to projects in the city of Toronto.  One of the projects I loved was 35 Charles St. “Casa” condos.   This new project will be a total of 400 units on 32 storeys.  The Architect is architectsAlliance who are also popular on the Toronto scene.  This project will offer 24- hour concierge, workout facilities, a Yoga Studio, Media, Billiards, Games and Party room complete with Kitchen Facilities.  It will also have a signature Rooftop Terrace.   

Next weekend is the pre-release where you will be able to buy at the lower price.  After this the good units are sure to be gone and the prices go up.  If you’re interested in going let me know and I’ll make the arrangements.  It’s a process so don’t wait too long before getting back to me.  

Rules for real estate investing

With interest rates sitting at record lows, it's never been more affordable to add a rental property to your investment portfolio. But is becoming a landlord right for you? 

1. Are you entrepreneurial-minded?
While buying a rental property may seem like straight-forward endeavour, it is, in essence, a form of self-employment. As such, you will have to be able to do the math (to ensure your investment is profitable), know the tax implications, acquire appropriate tenants, and hire the right property manager (or manage the maintenance issues yourself). A lot more work than simply finding a tenant and collecting the rent!
2. Does it make financial sense?
In order for a rental property to be profitable, you have to make sure that it will generate a steady monthly income - after mortgage and operating costs - and eventually appreciate in value. That means buying in an expensive market like Toronto or Vancouver may not make as much sense as a smaller market such as Kitchener, Ontario where property costs are lower. The key is to look for an area that has increasing job and population growth.
3. Is it the right time to buy?
If you're approaching retirement, an investment property may not be the best option for you. The same holds true if you're just scraping by - and if your property will start losing money should interest rates rise. As with all real estate, you should view investment properties as long-term investments - giving them plenty of time to appreciate in value, and less vulnerable to interest rate hikes. To find out if now is the right time to by, it's worth talking your decision over with me, or your financial advisor.

New Years Resolutions? There's an app for that.

Well, 2012 is finally here - and that means a new set of New Year's resolutions have likely begun. If you're the type of person who has trouble sticking to their goals, you may want to check out the following apps for the most difficult of resolutions. That is, if you haven't broken them yet!

Quit Smoking
My quit coach
This app helps you quit smoking by helping you establish an attainable quitting plan with weekly goals tapered to your needs.
http://itunes.apple.com/ca/app/livestrong-myquit-coach-dare/id383122255?mt=8
Lose weight
Nike Plus
The Nike Plus app uses GPS technology to track your runs and progress. It also links to your Facebook account, so every time a friend "likes" your status, you hear cheers throughout your run!
 http://itunes.apple.com/ca/app/nike-gps/id387771637?mt=8
Saving Money
Mint
Listed as one of Time magazine's 50 Best iPhone Apps of 2011, this app helps you keep track of your finances, budgets, bills and bank accounts on the go.
http://itunes.apple.com/ca/app/mint.com-personal-finance/id300238550?mt=8
Everything else...
 Resolutions 2012
This app allows you to input your specific New Year's resolutions, and helps you create habits that need to be adopted for you to attain these resolutions.
 http://itunes.apple.com/ca/app/id470395820?s=143455